TiVo Partners Opera - Analyst Blog

TiVo Inc. (TIVO)
and Norway-based Opera Software recently entered into a
partnership that will allow the former to add Opera Devices SDK
and Opera TV Store to its newly- launched Roamio DVRs.

Opera is a well-known provider of Internet based-technologies to
makers of set-top boxes and connected televisions. The Opera
Software SDK was shipped to more than 25 million households in
2012. The Opera TV store was also available to more than tens of
millions households at the end of last year.

The partnership will enable TiVo to offer HTML-5 based
applications to its customers. Moreover, developers will be able
to use the software development kit ("SDK") to build
TiVo-specific applications, which the company will offer at the
time of its launch of App-Store later this year.

TiVo is expected to offer Opera's TV app store to its customers
by early 2014. The integration will help TiVo to offer new
innovative products such as Opera Snap, an application that can
convert online videos to connected TV apps.

Opera's strong clientele and partnerships with popular content
providers such as
Google
's
(GOOG)
YouTube who are increasingly adopting HTML-5 is a major positive
for TiVo. This will make the DVR platform much more attractive
for advertisers.

Moreover, the addition of the new features on Roamio will boost
subscriber base going forward. At the end of the recently
concluded second quarter, TiVo's total subscriber base was 3.62
million compared with 3.40 million in the previous quarter and
2.72 million in the year-ago quarter.

Although the resolution of patent litigation issues removes a
major overhang on TiVo, we believe that innovation is of utmost
importance to the company to sustain profitability going forward.
In this regard, TiVo's focus on forging deals with mid-tier
operators (who will not build their own offering) is a prudent
move in our view.

We believe that TiVo has significant growth opportunities in
Western Europe and Latin America, given its partnerships with
local providers. TiVo's strong balance sheet will also enable the
company to pursue strategic acquisitions. Its aggressive share
buyback program will boost growth in the near term.

However, increasing competition from the likes of
DirecTV (DTV)
and
Apple (AAPL)
remains a major overhang. Additionally higher investments on
research and product developments will keep margins under
pressure in the near term.